Sony's Profit Weakened as PS4 Sales Slow
Sony reported lower-than-expected profit on Friday, though a one-off gain related to its acquisition of EMI nevertheless pushed the quarterly result to a record high.
Sony has been focusing on entertainment with stable revenue from music content and gaming, after battling years of losses with consumer electronics.
But Sony's gaming business shows signs of slowing, with the PlayStation 4 (PS4) console nearing the end of its lifecycle.
"Hardware sales dropped to 8.1 million units in the quarter, but that's meeting our expectations for a console entering its sixth year," Chief Financial Officer Hiroki Totoki said at an earnings briefing.
Sony said operating profit rose 7.5 percent to 376.99 billion yen ($3.46 billion) in October-December.
Driving the increase was a surge in profit at its music business after completing the $2.3 billion acquisition of EMI late last year to become the world's largest music publisher.
Profit in the gaming business fell 14 percent as the popularity of exclusive titles such as "Marvel's Spider-Man" failed to offset shrinking PS4 console sales.
Despite a decrease in sales resulting from a decrease in PlayStation 4 hardware unit sales, FY18 Q3 sales increased 10% year-on-year to 790.6 billion yen, primarily due to an increase in game software sales. Despite the increase in sales of game software, operating income decreased 12.3 billion yen year-on-year to 73.1 billion yen, primarily due to the decrease in sales of PS4 hardware and the negative impact of foreign exchange rates, according to Sony.
FY18 Q3 sales of Sony's Mobile Communications segment decreased 37% year-on-year to 137.2 billion yen primarily due to a decrease in unit sales of smartphones.
Sony also cut its profit outlook for imaging sensors, citing weakness in the global smartphone market.
"We haven't changed our view that demand for our high-end sensors will increase, or our plans to increase production capacity to the full," Totoki said. "But we will adjust the timing of the capacity boost depending on demand."
Sony maintained its annual profit forecast of 870 billion yen, exceeding an all-time high marked just last year.